‘Me too’ funds
A similar sentiment came to the fore during the Portfolio Adviser Summer Congress 2015 earlier in the month, with wealth managers continuing to raise the question of performance.
Dan Kemp, CIO, EMEA at Morningstar told Portfolio Adviser that one of the things that the firm has noticed is that managers are sticking much more to their knitting than was perhaps previously the case. “Managers are much more focused on ensuring they deliver returns for investors because, no longer is this a market where ‘me too’ funds can do well.”
Kemp added: “Focus, is the most important thing now, if active managers are going to rise to the challenge presented by passive, they have to do things really well and do so consistently. The ‘me too’ funds that charge too much for too little really have to be a thing of the past.”
There has been a definite increase in focus in recent months, not only on fund performance, but also on metrics like active share that proffer guidance as to how much ‘work’ a manager actually is doing.
Whether or not such metrics do what they purport to do, is a whole other question, but the trend makes sense in a world where one can buy the index for ever fewer basis points and increasingly savvy clients are reluctant to accept an answer of: “But you lost less than the peer group”
The heat is definitely been turned up on the active managers. And, if the numbers the numbers put out by the AIC offer any insight it is that investors are willing to vote with their feet.
